09/07/2011: Construction Activity : Ireland 1980-2010

Rummaging through the Federal Reserve database, I came across a fascinating set of numbers on the number of construction permits issued in Ireland. These are based on index with 100=2005 level of activity.

• By the end of 2010, new dwelling construction activity has fallen from the high of 102.4 attained in 2004 to the low of 15.3.
• Year on year, 2010 activity was down 56.8%. 2010 marks a decline of 80.7% on 5 years ago, 80.6% decline on 10 years ago, 56.4% decline on 15 years ago, 26.1% decline on 20 years ago, 8.5% rise on 25 years ago and 58% decline on 30 years ago.
• The only sustained decline period - other than current - was 1983-1996 period, when activity dropped from 35.2 in 1983 to the trough of 12.8 in 1988 - 4 years of decline and the cumulative drop of 63.6% (much more benign that the current drop of 85.1% to the end of 2010). The recovery in that contraction took over 13 years.
  

So we had a cycle of over 17 years and if one were to count 1981 as a peak with 1982-1983 as a temporary bounce, then the last cycle took 19 years to unwind. Good luck to anyone still hoping for a return to "normal" unless your normal is pre-boom average activity at 51-52 or roughly a half of the construction activity in 2004-2005.

Here's the chart:

Rates of decline, degrees of (construction sector) misery

Earlier today (here), I gave some figures from the CSO data release on planning permissions. Here is what I wrote:

"Also per CSO release, the number of dwelling units approved was down 22.4% in year to the end of Q4 2008. In Q4 2008, planning permissions were granted for 10,375 houses as opposed to 13,135 in the Q4 2007, a decrease of 21%. Only 3,392 planning permissions were granted for apartment units, compared with 4,598 in Q4 2007, a decrease of 26.2%. The total number of planning permissions granted for all developments was 8,977, as compared to 12,330 in Q4 2007, a decrease of 27.2%. Dire stuff once again. I will do the detailed analysis of the sectoral decline dynamics in a follow up to this post."

So, as promised here are some graphs illustrating the dire state of affairs in construction industry.

First chart below shows two things:

1. Numbers of permissions granted (annual totals) for main categories of dwellings and in total - these are now clearly falling at the fastest annual rate;
2. Total area of all construction projects applied for is also falling at the fastest rate of decline.
   

Now, the next chart shows total number of permissions granted per quarter. Here, the most dramatic trend is also found in 2008, most specifically in Q3 and Q4 2008, when quarterly rates of decline in total number of permissions granted were the steepest for any quarter since Q3 2000. And the rates of decline are accelerating, relative to Q1-Q2 2008.
Lastly, more detailed quarterly date below, by each broader category of permits. I also included trend lines for the period of peak-to-present contractions, showing that Q4 2008 dynamics were consistent with generally accelerating deterioration in all categories of permits, save for 'Other'. This means that we can expect this category to actually fall further and faster in months to come.
So here you have it, for construction industry - there is no bottom in sight, yet...